Exemption for parts used in pump manufacture upheld where notification conditions were met and no extra design was read in.

Ball bearings used as parts in the manufacture of P.D. pumps were treated as eligible for exemption under Notification No. 64/86-C.E. because the prescribed Chapter X procedure had been followed and no extra condition could be read into the notification requiring the parts to be exclusively designed for that use. The liability point also favoured the respondents: any duty, if otherwise attracted, was stated to lie on the manufacturer of the ball bearings, not on recipients who merely used them in manufacture, especially where no show cause notice had been issued to the manufacturer. On these facts, the relief granted to the respondents was maintained.

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Issues: Whether ball bearings used in the manufacture of P.D. pumps were entitled to exemption under Notification No. 64/86-C.E., and whether any duty liability, if attracted, could be fastened on the respondent-recipients.

Analysis: The ball bearings were admittedly used in the manufacture of P.D. pumps and the prescribed procedure under Chapter X of the Central Excise Rules had been followed. The notification was read as granting exemption to parts used in the manufacture of the specified pumps, and no additional condition was found requiring that the parts must be exclusively designed for that use. It was also noted that the respondents were only recipients of the ball bearings for use in manufacturing pumps, while no show cause notice had been issued to the manufacturer of the ball bearings.

Conclusion: The exemption was available on the facts, and no duty could be fastened on the respondent on the footing that any liability, if at all, lay on the manufacturer of the ball bearings.

Final Conclusion: The appeal failed and the order granting relief to the respondents was left undisturbed.

Ratio Decidendi: Where goods are used as parts in the manufacture of the specified final product and the prescribed procedure is followed, exemption cannot be denied by importing an additional condition not found in the notification; any duty liability, if otherwise attracted, lies on the manufacturer of the goods and not on the recipient who merely uses them in manufacture.

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